Public Bill Committee

[Mr Joe Benton in the Chair]

The Committee deliberated in private.

On resuming—

Joe Benton: Good afternoon. We will now hear oral evidence from the Council of Civil Service Unions, Prospect and the First Division Association. Perhaps the panel will briefly introduce themselves to the Committee.

Dave Penman:  I am Dave Penman, head of operations at the FDA, and I lead for the FDA in all civil service-wide negotiations.

Charles Cochrane:  I am Charles Cochrane, secretary of the Council of Civil Service Unions, or CCSU, which acts for the five national civil service unions.

Dai Hudd:  I am Dai Hudd, deputy general secretary of Prospect, and I lead on all matters relating to civil and public services for my union.

Karen Bell:  I am Karen Bell, civil servant. I work for the Central Office of Information, and I am a member of Prospect.

Neil Walsh  :  I am Neil Walsh, pensions officer with the trade union, Prospect, and I deal with technical pension and redundancy queries.

Joe Benton: Thank you very much, and welcome. Before I call the first Member, I remind all Members that questions should be limited to matters within the scope of the Bill, and that we must stick strictly to the timings in the programme motion that the Committee agreed. I will try not to interrupt anyone in mid-sentence.

Q 91

John Hemming: In a sense, questions four and five are talking about where the negotiations go now, and that question is addressed to anyone involved in the negotiations. Obviously, you cannot talk about the details of the negotiations, but do you think that constructive negotiations are proceeding, following the introduction of the Bill? Is it possible to engage in constructive negotiations? Do legal or strike action, or threats of strike action, add to the process of potentially coming to a resolution or do they detract from it? How do you see things going from here?

Charles Cochrane:  The negotiations are under way. They are being conducted with the Council of Civil Service Unions. All of us, on both sides, are proceeding on the basis that we would like to reach an agreement. As matters develop—I think that they will develop quite rapidly—we will be in a position to make judgments about whether we will reach that agreement. But, of course, we are there.
In terms of the Bill, I have to say that I have been involved in negotiations in the civil service for 31 years, and this is the first time that I have ever been involved in negotiations where legislation has been introduced in Parliament as a tool in negotiations, so it is a very unusual and, I would argue, very unhelpful step.

Dai Hudd:  You are asking about industrial action, and my union, as a matter of policy—as part of its DNA—would want to exhaust all forms of negotiation before we considered industrial action. That is exactly the position we are in. We are in the discussions with the Cabinet Office at the moment, and we are seeking to make progress on those. We will make a decision and a recommendation to our members based on the quality of the output of those negotiations. We should bear in mind that we have been there before. We were one of the unions that came to an agreement with the previous Government. So industrial action will be considered in the light of whatever comes out.
In terms of the Bill, I agree very much with the point that Charles made. It is really unfortunate that the Government have chosen to use it, but in relation to the judgment about the quality of the outcome, it is irrelevant. Our members will take a look at the quality of the outcome that we have achieved in the negotiations and at what we recommend to them, and that will be the basis for the decision they make. I do not think that the Bill of itself will influence them, and, frankly, nor should it.

Dave Penman:  From my perspective, the Minister summed it up perfectly when he said it is a blunt instrument in the debate last week. Clearly, it has been designed to try to influence the negotiating process. From our perspective, particularly as a union that reached an agreement with the previous Government, our preference would be that the negotiations that are taking place just now did so with no strings attached and no blunt instrument that is acting as a threat if those negotiations do not produce an outcome that the Government find acceptable. As Charlie says, in 15 years of dealing with negotiations in the civil service—I am not as old as Charlie—I have never seen a tactic like this, and it is not particularly helpful from our perspective, as a union trying to reach agreement.

Q 92

John Hemming: And you are the three who deal with negotiations?

Charles Cochrane:  Yes. There are other unions involved in those negotiations, but it is fair to say that their views would be the same.

John Hemming: Perhaps I should say that the people on the panel at the moment had come to agreement previously.

Charles Cochrane:  Strictly speaking, the Council of Civil Service Unions did not come to an agreement. The view of the council was that there was not a consensus, so we were not in favour of an agreement.

Dai Hudd:  In relation to the players in the discussion, Dave Penman, for the FDA, and myself, for Prospect, were involved in the negotiations from start to finish, so we were very much up to speed with all that happened in them.

Q 93

John McDonnell: One issue that we raised this morning was the potential for legal challenge. The judicial review confirmed, as you know, that the issues around the compensation scheme included accrued rights and that interfering with the possession of those rights would be in breach of the European convention on human rights. How confident are you that the Bill is actually unlawful and therefore open to challenge?

Charles Cochrane:  The judicial review was of course taken by the Public and Commercial Services Union, although I happened to be a witness in the case. The Council of Civil Service Unions currently has legal advice from leading counsel, and we are seeking further clarification from him in time for a meeting that we have next week. But we certainly have a view that there is an argument to be made about accrued rights, which picks up the point that I think was developed in your session this morning about the Human Rights Act 1998, and the right to hold property, wages being deemed to be property, and about case law, which demonstrates that pensions are property. In the particular context of the civil service compensation scheme and its statutory basis, an argument flows through from that that provides protection. It is certainly an argument that is coherent. It is equally an argument that has never been fully tested in either the UK courts, other than during the judicial review process, and certainly has not been to Europe.

Q 94

Claire Perry: Thank you for your time this afternoon. One of the issues that we are all very interested in is the protection of the lowest paid who, of course, were exempted from our proposed civil service pay freeze. I would be very interested, in the light of what you were saying about the quality of outcomes, in how you think of the threshold. What actually determines low pay in your mind? Also, is a good-faith negotiation the best way to achieve that protection? Again, I would be very interested in your views on that point.

Charles Cochrane:  The union that has the highest proportion of low-paid people is the PCS, so you may want to ask some of those detailed questions to them. One of the concerns that we have is not just about the lower paid—I will deliberately use the words “lower paid”, rather than “lowest paid”. Evidence, I think, was given this morning that about 50% of civil servants earn less than £22,000 a year, which gives you a flavour. But the Bill has a particular and fairly crude impact on long-serving staff, many of whom can be lower paid. We have many examples of people who have been administrative officers in the civil service for 40 years who would be very much affected by that. The Bill would have an immediate impact on anyone who has probably got more than 14 years’ service, whether they are earning £20,000 a year or £40,000 a year.

Dai Hudd:  Although the PCS has the greatest predominance of the low pay, Prospect has a significant number of members who are low paid and, I have to say, highly-qualified low-paid people; for example, curators in museums are highly qualified, highly skilled and low paid. In terms of what we tried to do in our negotiations with the previous Labour Government, we would come up with a formula that effectively meant that anybody below around £20,000 could still earn up to three years compensation as part of the compensation scheme. But that would taper out to those people to around £30,000 on a very slow basis on the way through. Our view was, in a balance of judgments—I fully accept the balance of judgments of any two unions may be different on these matters—that, together with the protection that we had negotiated for those within 10 years of retirement, that meant that for most people on lower pay we had given the right level of protection as a balance in an overall package. So that was, if you like, what we sought to do.
I think that the figure of £22,000, in terms of the average of pay in the civil service, is an interesting one. We had a look at pay figures from 1997 to 2008 and private sector pay went up by 55%, public sector pay by 54% and the civil service by 45%. So you are not looking at a part of the population that has had a huge largesse in recent years in terms of pay awards.

Q 95

Claire Perry: It is interesting that you say that, because of course we heard evidence this morning from a different group of witnesses suggesting that, in fact, there had been, if you take average incomes across the private and public sector, quite substantial relative increases in the public sector versus the private sector. Indeed, if you look at average weekly earnings in the private and public sector, there is now a discrepancy in favour of the public sector. What we are trying to understand is the whole compensation compact, which to me includes hourly earnings, pensions and, indeed, redundancy pay, and make sure that we have something that is fair and equable across the whole of the work force, whether public or private sector. I would be interested in your views on whether you feel that does or does not exist currently.

Dai Hudd:  In terms of any comparison between the public and private sectors, you have to compare like for like. Part of the problem when making those comparisons relates to the proportion of the skilled work force that resides in the public sector, as opposed to the general economy, because the general economy, by and large, does not have the same level of people doing complex and highly skilled work as the pubic sector. An awful lot of that is a product of previous outsourcing and privatisation when, by and large, the low-hanging fruit—the service work—was outsourced, so you cannot make that comparison in a similar way. The point that I was trying to make was that if you look back over the period from 1997 to 2008, you will see that the pay growth in the civil service has lagged behind both the public and private sectors.
In terms of comparisons between the reward packages for civil servants on redundancies, it is a highly complex issue. If you were to ask, “Are the redundancy packages for civil servants overall more generous than the rest of the economy?”, the answer is that they are. However, the problem is that disentangling that is incredibly complex.
In terms of the legal issues surrounding how those packages have been arrived at over many decades, being able to come to some form of agreement and resolve some of those anomalies presents not only the employer with a lot of problems, but the trade unions, frankly, with a lot of problems. That is why the union that I represent was one of the five that made an agreement with the previous Labour Government, notwithstanding the legal advice that we received, which, by the way, was consistent with all the unions—we all knew exactly what legal advice we had. It was the best compromise that we could arrive at between bringing civil service redundancy terms into line with the rest of the public sector and protecting the legal rights and entitlements of our members. It is a more complex issue than simply a broad, crude comparison.

Dave Penman:  It was interesting to hear during this morning’s evidence session that, for FDA members at the more senior end of the civil service, there is no comparison between terms and pay, as was accepted by those giving evidence. Senior civil servants, once they reach about £30,000 or £40,000, are significantly behind the rest of the public sector, and even more significantly behind the rest of the private sector, even when you take account of pension provision. There is a very complex issue here is relation to comparable pay if you are simply going to look at public and private sectors, because you must also look at the civil service, which is at the bottom of the public sector pay league. We must take account of all those issues when considering what the deal is for civil servants, as civil servants do when they choose what type of career they want.

Q 96

Tessa Jowell: I want to return to what I think is the headline question. The Minister for the Cabinet Office has made it clear that he wants to see a negotiated agreement that will make the Bill redundant. If the February 2010 proposals were put back on the table, would you see them as a good basis on which to open negotiations, with a view to reaching a negotiated settlement?

Charles Cochrane:  The short answer is yes. It would be a good basis for reopening negotiations.

Q 97

Tessa Jowell: Do you think that that applies to all six unions?

Dai Hudd:  With respect, that is a question you will have to put to all six unions separately. I can certainly tell you that, from Prospect’s point of view, we would be happy to open discussions on the basis of the agreement that we agreed with in February.

Dave Penman:  That is the same for the FDA, which we have stated publically as well.

Q 98

Richard Graham: Following the point made by my hon. Friend the Member for Devizes, can we just clarify with you all that, when oral evidence was given on 27 July, the reasons given by the PCS for not agreeing to the agreement put forward in the negotiations with the previous Government was that the majority of its civil servants earned less than £22,000 and that
“the sticking point for us in the last negotiations was over the level of protection there was to the lower paid in the Civil Service”?
Evidence given by either yourselves or your representatives from the same unions confirmed that the deal on the table for those who earned less than £20,000 was a retained three years’ pay. To quote the FDA representative, I think that you felt that it was the right balance in the agreement that everybody under £20,000 should retain pretty much the terms that they had.
The question in my mind is this. If the deal on the table for the lower-paid members of your unions was pretty good and the people who would miss out were predominantly the better-paid members, why did the largest union, which represents predominantly the lower-paid and has the largest number of them, turn down the deal? Can you explain to the Committee what the rationale was? Would you not agree that they have made a fundamental mistake in letting down the union’s lower-paid members?

Charles Cochrane:  That is a question for my colleagues from PCS, who will be answering your questions at 5 o’clock, but I think that they would find the statement has been slightly misrepresented.

Q 99

Richard Graham: Quite so, but I would like your views, please.

Charles Cochrane:  I think that it would be far more appropriate, with the Chairman’s consent, to direct that question to PCS.

Q 100

Richard Graham: Can I put the question another way? Could you all confirm that from your unions’ point of view, the deal on the table then was attractive as far as the lower-paid members were concerned? For this purpose, we can define “lower-paid” as earning less than £20,000.

Dai Hudd:  Can I answer that? I am not trying to duck your immediate question, but in any complex package—I have been a full-time officer of a trade union for 25 years and active in the trade union movement for nearly 30, and I have never handled or been involved in such a complex set of negotiations—a number of different parameters come into play at the same time: legal, political and timing. The agreements themselves were complex, covering a large range of people.
What we did as a union was to take the entire package—not just the bit for the low-paid, but what we had negotiated as a complete agreement. We took the complete offer that was on the table in the final session, including the bit for the low-paid; Prospect does have low-paid members. As a package, we recommended that. I would be slightly reluctant to unpick bits of it, in reality, because that is the way that we put the issue to our members. In response to the question put directly by Tessa Jowell as to whether we would reopen discussions in February on that basis, that really has to be my answer. If it is that package, then yes, and it does include what you describe.

Q 101

Richard Graham: But you would surely recognise, would you not, that the reason why this Government are introducing the Superannuation Bill is precisely that the previous package was ultimately rejected, as it happens, by the largest of the trade unions, and that reverting to the previous package is therefore simply not a practical option? Although you are obviously reluctant to separate out parts of the package, can you confirm what Jonathan Baume of the FDA said? He said specifically:
“We had protected over half the Civil Service and everybody under £20,000 retained pretty much the terms that they had”.
Surely that statement says that what was on the table was attractive to the lower-paid. Therefore, surely one union prevented a deal that would have protected the interests of the lower-paid especially, leading to a situation in which the Government have no option but to return to an issue unresolved by the previous Government with a Superannuation Bill to ensure that some solution is reached.

Dave Penman:  As you are quoting my general secretary, the point that we are making as a union that has very few low-paid members—although we do have some—is that we were looking to ensure that any package on the table in those negotiations was as fair, broadly, as possible. As a trade union, we are not simply interested in a narrow group of members, whether it is one particular group of our members or across the whole. We recognise that any deal was only going to be sustainable if it addressed a number of the issues, and the issue about the lowest-paid was a particular one. We as a union felt at the time that the balance was right in relation to the deal in February. It provided value for the taxpayer in producing £500 million worth of savings, addressed a number of age discrimination issues and provided some protection for our members. Inevitably, in a complex set of negotiations, you are looking at that in its entirety. That is the judgment that we came to.
As we said, you will have to ask PCS about the decision that it came to. As an independent union it is free to make that decision. What I would say—given the judicial review and the decision in relation to it—is that it was open for this Government, in relation to the compensation scheme, to put on the table a set of terms that would have been more acceptable to my union and the unions that signed up to the agreement in February. But they have chosen—to quote the Minister again—the blunt instrument of the Bill that is going through now: 12 months on compulsory redundancy and 15 months on voluntary. I think that makes a deal more difficult, certainly for us as unions that engage constructively and tried to reach agreement with the previous Government. It makes it more difficult in relation to the current negotiations. I don’t think that was an inevitable result of the judicial review and the rejection of the PCS. I think there were a number of options that could have been taken in relation to the Superannuation Bill.

Richard Graham: I would conclude that all the members of your unions and members of the PCS have been badly let down by the PCS.

Q 102

Harriett Baldwin: I want to ask an almost identical question to that of the right hon. Member for Dulwich and West Norwood. If the February 2010 deal were on the table once again, would your members settle for that deal?

Charles Cochrane:  The point put by the right hon. Lady was: would it form a basis for reopening negotiations? The answer we all gave to that question was, yes it would form the basis for reopening negotiations. The problem is that that is not on the table. What is on the table, I have to repeat, is a very crude Bill that seeks to impose arbitrary and draconian—if I can say it—caps on civil service compensation payments. If introduced and implemented—and we have to work on the basis that that is the Government’s intention—those caps would have a dramatic impact on the compensation received by our members, whether they are from PCS, FDA or Prospect, in the current situation. There are a number of people here this afternoon able to give evidence of what that impact would be.

Q 103

Harriett Baldwin: I appreciate that you answered the question earlier, saying that it would be a good basis for the reopening of negotiation. I phrased it slightly differently. Would your members settle for that? One thing we can all agree on—and was agreed on Second Reading—was that a negotiated settlement would obviously be much better than this Bill having to be enacted. The question is: if the offer were back on the table, would your members settle for that?

Dai Hudd:  Can I try to be helpful? Unions are democratic organisations, so I have no power—nor do I seek it—to say to you now what my members would or would not accept. We don’t operate in that way, nor should we. We did a consultation exercise based on the agreement we reached in February with our members. We canvassed views extensively, and put out a significant amount of literature explaining what we did. Yes, there were reservations, but overall our members accepted the judgment we made, why we made it and the way that we made it.
I do not believe that our members’ views on that deal are much different today from what they were then. We explained to them that there was a possibility of a judicial review, that the judicial review might be won and that their accrued rights might be protected by that judicial review. But we said, “Let’s take a look at what may happen in the light of that and, therefore, balance the agreement that we have arrived at, which we think was the right balance between the different conflicting interests of our members.” They concurred that our judgment was correct. I have nothing in front of me to date that tells me that, if we go back to our members with a very similar package in the same way, the logic we applied then is going to be overturned.

Q 104

Jack Dromey: First, I should declare an interest. I was for 15 years chairman of the Ministry of Defence Joint Industrial Whitley Council, representing industrial civil servants in the Ministry of Defence—at their height, 109,000 of them. I would like to explore the consequences of what is proposed in the Bill. I want to give you an example of an industrial civil servant in the Ministry of Defence and ask you, as unions representing non-industrial civil servants, if this experience is one that is common across the civil service.
I have a number of cases in front of me, but a particular one refers to Northern Ireland and a skill zone 3 vehicle maintenance fitter, earning £21,000, who commenced employment in 1982 and has had continuous employment since. Mercifully, as a result of the peace process, Operation Banner and normalisation, at a time when significant reductions were being made, he was offered £77,000, of which £14,000 was the financial recognition award, the additional payment on offer at the time. He was then asked if he would be one of those who stayed on, to ensure continuity of service to the Ministry of Defence. He considered it with his family, agreed to stay and, on doing so, was reassured that, if he went in subsequent years, he would not get the FRA payment but he would still receive £63,000.
As a consequence of what the Government now propose, if he is made redundant—fresh redundancies have been occurring in the Ministry of Defence—he will lose £56,000. Is that the experience of non-industrial civil servants?

Charles Cochrane:  In very broad terms, yes, that is actually right.
We have three witnesses here today who can give examples from the Government office network, which is under threat of closure, and from the Central Office of Information, which is under threat of being decimated—not too strong a word, I think. They are in exactly the same situation. If they were made redundant now, they would get x, but if they were made redundant, as is likely, in a few weeks’ time, after the Bill goes through, they are likely to get about a third of what they would previously have been entitled to.

Q 105

Jack Dromey: With your leave, Mr Benton, may I ask some brief questions? It would be helpful if the Committee heard that testimony, because it is important that Parliament hears the consequences of its actions before it makes any final decisions on such matters.
I want to ask two other questions. First, are you aware of any precedent, in respect of any area of public sector employment, of statute being used unilaterally to change terms and conditions of employment—in this case, significantly for the worse?

Charles Cochrane:  There is a long and a short answer. The short answer is, in the UK, no. However, if one was to look across Europe, there is a lot of evidence for civil servants’ terms and conditions of employment being determined by statute, but that is because they have entirely different models for running their civil services. They run them on a different basis.

Jack Dromey: I am not aware, Charlie, that the Council of Civil Service Unions represents French civil servants—you represent British civil servants.

Charles Cochrane:  But we all have our aspirations.

Q 106

Jack Dromey: Are there any precedents?

Dai Hudd:  We can find no precedent, no. Obviously, a lot happens in terms of parliamentary process, and I am sure that some geek somewhere can find some piece of legislation somewhere, from some point in time, that might have had an effect. We have tried to do research—we have employed researchers to find any piece of legislation that could be used, or said to do so, in a similar way to the Superannuation Bill. We can find none.
One of our challenges to the Government is: is this a precedent? If so, it needs to be very clear that it is a precedent, because it sends shockwaves not just through the civil service but for any public sector worker. It sends shockwaves right the way through because, in effect, any set of terms and conditions could be potentially under threat.
We have brought a witness, Karen, who works for the COI. Would it help the Committee if Karen went through what is likely to happen to her? They are under threat of redundancy. If she explained the figures and the impact of the Bill, would that be of assistance?

Joe Benton: I am in the hands of the Committee. I see no objection to it. If Karen Bell wants to make a contribution, by all means do so.

Dai Hudd:  Unlike us, this is a real servant, not superannuated trade union officials.

Karen Bell:  Thanks, Dai. To give a bit of background, the COI has announced that it is making 287 of its 750-odd posts redundant, which amounts to just under a 40% cut in staff. I am a typical person who will be affected, and I am, by no means, the only one who will be affected by the cap. If the cap comes into play and I am compulsorily made redundant in November, which is the timetable at the moment, I will be worse off to the tune of just over £17,000. For me, that is the difference between giving me another six to eight months breathing space to find another job, which when I am in my 40s is perhaps not the easiest thing to do. If I am voluntarily made redundant, I will be worse off to the tune of an £8,500 difference.

Q 107

Jack Dromey: Can I ask one other question that follows on from that? Last week, the Minister for the Cabinet Office described the Bill as a blunt instrument, when bringing it before Parliament. What was your reaction to being told that a blunt instrument was being used against you?

Karen Bell:  Personally, I found it appalling. Dai was mentioning earlier about whether the members would vote for what has happened. As a member, I would be much more comfortable accepting what my union had negotiated. What is facing us at the moment is something that, from a personal point of view, has been arbitrarily decided and been thrust upon us. It is just playing with people’s lives. We are the ones who are going to have to live with the consequences of that—not just me, but lots of other people.

Q 108

Gregg McClymont: I want to return to an issue that was raised a moment ago, which was the relative pay in the public and private sectors. It seems that underpinning many views on the Bill is a perception of public and private sector pay. Can I invite our witnesses to elaborate a little on that comparison and on why some of the things that are in the public sphere about that comparison may be unfortunate and inaccurate.

Charles Cochrane:  Perhaps I can start, although certainly my colleagues who will be speaking later from the PCS can give a lot more detail about the pay. It is a bit of a stereotype, but I think that there is a lot of truth in it. Many people who join the civil service join as a career, with the expectation of working in the civil service for 40 years. When they joined, they knew that the pay was not very good, but they thought that it had a reasonable pension and that it was a secure job. Many of those civil servants are aware that there were reasonable provisions in place to compensate them if they lost that job. It is an old-fashioned phrase, but it is still very valid: it was about loss of office. It goes back to the point that was being made by one of your colleagues about the compact. That was the deal that people bought into, and certainly their expectations about pay have been proved correct over many, many years.
We can demonstrate fairly conclusively that the civil service is the major area of the public sector where the pay has been unreformed for as along as I have been involved. We have just muddled on with constant talks about pay reform in the civil service, but they never lead to anything. We have yet another round of them going on now. The witnesses this morning made a valid point about comparisons between the private sector and the public sector, but the comparison that we have to make is with the specific of the civil service. Every bit of evidence that we have got demonstrates that the civil service does badly on pay at almost any level that we look at, from the most senior downwards. The figure that was quoted by me and also by Dusty Amroliwala this morning about 50% of the civil service earning less than £22,000 a year—bear in mind many of those work in major conurbations—does demonstrate the scale of the problem. It can also be borne out by data that can be produced from official statistics about the levels of public sector pensions and so forth.
It is also worth making the point that, while the impression is given that people are departing the civil service under a compensation scheme and are getting five, six and seven times pay, when the question was asked this morning, my colleagues on the management side were unable to give any figures for that. The reality is that the overwhelming bulk of people who have left the civil service in the last three or four years are people in very junior grades in the Department for Work and Pensions, the Office for National Statistics, Her Majesty’s Revenue and Customs, the Ministry of Defence and so forth. We are talking about very much lower levels of compensation, borne out by Karen’s example. Looking at that whole context, it is not an over-generous scheme at all.

Dai Hudd:  Neil has some comments on the interplay between pay and pensions.

Neil Walsh:  Charlie perhaps covered some of them. It is important to distinguish between public sector comparisons and civil service comparisons. That point was raised earlier today in this Committee and at interventions in the debate on Second Reading last week as well. I do not think it was gotten across by those raising it, because it was repeated time and again, so perhaps it needs to be answered time and again that public sector is not civil service. The effect of the Bill would see civil service redundancy terms far below the rest of the public sector as well. Not only would median pay still be £21,000 per annum, which is below public sector—that is why it is important to distinguish them—but they would also have a redundancy package that was worse as well.
There is another point to make, and it is brought out not just by trade unionists representing civil servants. Whenever there are debates about pension provision—the Pensions Policy Institute is a well regarded independent think-tank in this area—it always makes the point about why it does not make much sense to compare overall headline pay rates in the public sector with the private sector. Not only is that not a civil service example, but it does not take into account the types of jobs done there. If you control for level of qualification, for example, as the Pensions Policy Institute does, you will see that pay is not comparable between the public and private sector at all. Of course, over years, if you contract out a lot of the lower paid jobs from the public sector, that has the nice headline effect of increasing average public sector pay, but it has not done anything to any one individual’s pay within the public sector, so I think there are perhaps a couple of reasons why those comparisons are not the best ones to make.

Q 109

Gregg McClymont: Are you are saying that it is comparing apples and pears and, more broadly, from the other answer, that this is a blunt instrument directed at perhaps the wrong target?

Neil Walsh:  I would not want it directed at any target. It is an incredibly blunt instrument that will have a real impact on members, such as those who have spoken here today. It is going to come into effect if the House passes this Bill, and they will be targeted.

Richard Graham: Can I put a question?

Joe Benton: Order.

Q 110

Gregg McClymont: I was just going to ask, Mr Benton, whether it is possible to get information on relative pay in the public and private sector. Although it may not be seen as pertaining to the Bill precisely, it seems to me that it underpins a lot of the argument about the Bill. Can the statistical service produce a briefing on this comparison?

Joe Benton: Who are you asking to provide that?

Gregg McClymont: The Library could produce it. It could be made available.

Q 111

John Hemming: Just a quick question to Karen, whom I would like to come back to. Would I be right in taking the figures that you have given us and saying that if you are made redundant now under the old system, or the agreed system from earlier this year, you would get £51,000? If you are made redundant under VR, under the new system, it would be £42,500, and under CR it would be £34,000. Is that right?

Karen Bell:  If I were made compulsorily redundant now, I would get £51,000. If I were made compulsorily redundant in November, which is when the new Bill is in force, I would get only £34,000. If I went voluntarily at the moment, I would get the £51,000, but if I go voluntarily at the end of the month when the new Bill comes in, it would be £42,500.

Q 112

John Hemming: I was just trying to clarify that. I have a question for the negotiators, although it is also relevant to all civil servants. If you were here earlier, you would have heard from the civil servant, who told the Committee what advice he would give to the Government had they not changed, if the judicial review had gone through as it did. His advice to the Labour party in government would have been exactly the same, which is to go down this sort of route, effectively, to remove the veto to any change. It is not good news to be made redundant; there is no question about that. You cannot pretend that that is good news in any way.
In what other areas, other than looking at the overall package, would the civil service unions look for things to be done? The example made by the hon. Member for Birmingham, Erdington was a good one, looking at an exceptional case where perhaps a person made a specific decision at the request of the Government and where there should be some exceptions. I have talked in the past about a constituent who happens to be in a household with two civil servants, who approached me and asked whether there was any way to ensure that we do not have both civil servants made redundant in the same household by allowing someone who has been made redundant to nominate someone else not to be made redundant. Is it possible, for instance, to arrange for sabbaticals for people? In the interest of trying to balance out different people, is it possible to move people from full-time jobs to job shares and achieve a reduction in the count without doing something that someone does not want to happen? At times that might be possible.
The point about all that is that it is a very difficult situation. Nobody would want to be in it. There may be things that can be done by being flexible. I think that the example made by hon. Member for Birmingham, Erdington was a good one, where there is a specific injustice, which will happen in a number of cases, that should be dealt with as part of the negotiations. Are they the sorts of things you think should be looked at in the first instance? Are there other things that you would wish to be looked at?

Charles Cochrane:  There are a number of responses to what is quite a complicated question. Certainly, we have two more witnesses who are part of the PCS delegation, who will be able to give you more examples to follow on from the ones from Karen and the one from Northern Ireland. They all demonstrate the same point: the longer your service is, regardless of what you earn, the greater you are a victim of the Bill if it goes through.
We have had a great deal of experience in the civil service over the last three or four years, both on the management and trade union sides, in dealing with redundancies. You will be aware that the size of the civil service has declined by something like 86,000 to 90,000. Large numbers of people have left the civil service. We have been quite successful in trying to deal with that without recourse to many compulsory redundancies, but by the use of a wide range of sophisticated techniques, including some of the ideas that you have mentioned, particularly looking at redeployment, giving people new skills and running voluntary schemes where they work. We have done very well on that, and I think we can continue to do well because the objective of all of us is to try to avoid people being made compulsory redundant. One of the significant tools in doing that is having good quality voluntary redundancy schemes. That is one of the things that has helped people go and helped them deal with the consequences, because many civil servants have specific civil service skills and are in locations where it is not easy to find other work. However, the changes under the Bill do not help that process at all.
This morning, a question was asked of one of your other witnesses: could the Government deal with the redundancies that we fear will come under the present arrangements? I think my answer would be that it would be difficult, but it can be done, because it is about managing. An important point to be made is that voluntary redundancy is a very valuable tool. At the end of the day, it is one that is under management’s control. Management, provided it makes an equality impact assessment, can determine who can go on a voluntary basis and who cannot. That gives it the control to keep people with essential skills and have some idea of costs. That is what we have been doing for the past four or five years, and, in my view, we can continue doing that. The Bill is not necessary to help with that process.

Dai Hudd:  Can I deal with the specifics of the point that you raised? Mr Dromey raised a specific example. It is unfortunate that this Bill will have a devastating effect on some well-drawn plans for restructuring in a number of Departments. Let me give you a small example. Ordnance Survey is making technical changes and is switching the nature of its work force. By the way, I used to be employed by that organisation, so I declare an interest. It used to employ 2,000 surveyors in every major town in the UK. Technology means that it needs fewer survey staff in the future and more staff who use the data to create mapping and so on. So it can see ahead a skill change within the organisation. It is a net contributor to the Treasury, so it calls on no public funds in that sense. It has a plan to redeploy its work force over the next three to four years. The impact of this blunt Bill will set it a problem. Many workers have been able to adjust to when they go, the terms on which they go and what they do with their lives. So that organisation will go through a very difficult transition period, which means that it will either have to truncate that process or, as Charlie says, face significant problems. That is not the only Department. A number of other departments face the same situation as a consequence of the cuts that were planned under the previous Labour regime. The sensitivity to that will be lost completely if this Bill goes ahead. It will have a major damaging effect on real business drivers on changing parts of the civil service.

Dave Penman:  I was interested in the discussions this morning and in some of the questions that were asked of the witnesses. There was almost an assumption that the civil service does not know what it is doing with this, and here were some ideas to help it along. I should like to pay testament to the work that civil servants—particularly, but not exclusively, from the Cabinet Office—and Charlie and the Council of Civil Service Unions have done in managing a significant rundown in the work force. The organisation has reduced its work force by more than 80,000, relocated more than 20,000 jobs out of London in the past five years and done so without having to resort to more than about 80 compulsory redundancies through sophisticated management techniques, including the use of a range of voluntary redundancy arrangements. The civil service does not have one voluntary redundancy arrangement; it has a series of arrangements that can get used at different times and are more or less expensive depending on the circumstances. The civil service has been excellent in meeting that significant challenge and doing it in collaboration with the trade unions. It is a wonderful success story. As has been indicated, if we end up with a blunt instrument of the Bill that is going through, management will not have that sophisticated mechanism for managing that change.

Q 113

Angie Bray: Just a quick question to Karen Bell. As some of my colleagues have said, any prospect of redundancy is a grim one. Given what you have told us about what you expect from the Bill that would be different from what you get now, will you and your colleagues, who may also be facing the prospect of redundancy, be putting pressure on your union to ensure that you get a negotiated settlement that will supersede the Bill? Will you hope therefore to get a more generous settlement.

Dai Hudd:  I am under no illusion about the pressure that I am under in terms of my role in my union to get an agreement on this that protects our members against some of the biggest cuts that the public and the civil service have faced in the best part of two if not three decades. I am under no illusion what the pressure is. The testimony of Karen and others—

Angie Bray: I just wondered whether Karen wanted to comment on that herself.

Dai Hudd:  I am very happy for Karen to do so.

Karen Bell:  Apologies, I am a bit deaf. I missed the last bit of your question. Can you repeat the last bit for me?

Q 114

Angie Bray: I’m sorry. Given where we are with the Bill—you have given us the figures that you can expect and the changes it will bring—I am making a logical assumption that you and your colleagues will be urging your union negotiators to go for a negotiated settlement, which is far more likely to bring in a more generous settlement than if we settle with the Bill.

Karen Bell:  We are in a difficult position in the Central Office of Information in that our 90-day consultation process started in August and we have been told that if you are affected by the cap, you are not allowed to go early, even if you volunteer under the existing terms. We have to wait until the Bill becomes law, which is causing a lot of upset and turmoil. People feel badly done by and upset, to put it politely.
We are told that other Departments are allowing some of their staff to go early under the existing terms. That obviously makes us feel even more unfairly treated, not necessarily by COI, but by the system—for want of a better word. As I say, I am not the only one. The problem we have at the moment is we are all up in the air. We are a month and a half into the consultation, but we do not have details yet on the size and structure of the cuts, where the cuts are going to be, whether any of the regional offices are going to close or whether they will just want numbers reduced. The uncertainty and added stress of that is upsetting everybody and means that morale is low.

Q 115

Angie Bray: But is it your understanding that because negotiations are going on at the same time, a negotiated settlement might give you a better settlement?

Karen Bell:  We knew that changes were going to be made. As I said before, as a member of Prospect, I would be much more comfortable with something that my union had negotiated on our behalf than something that is being arbitrarily brought in. Our terms and conditions are being changed without some form of negotiation, which to me is morally wrong.

Q 116

Angie Bray: Can I put a question to Mr Cochrane? You mentioned a little while ago that one of your concerns has been that it is always the junior staff who tend to find themselves made redundant first and make up a large number of those who are given redundancy. Would you agree that one of the points behind the cap in the Bill is to try and get around that particular problem, because historically it is those who are too expensive to let go who stay in their jobs, and it is those who are last in with the fewest rights accrued who are let go first. That is exactly what the Bill is trying to address.

Charles Cochrane:  I do not think the Bill is trying to address that because the fact is that many civil servants at every level have considerable amounts of service. The nature of the civil service is that people join it as a career. That career might well be in their local jobcentre, tax centre or whatever, where there are no great prospects of promotion. I have come across people who have worked as an administrative assistant—the most junior grade in the civil service—for 42 years. They are very good at it, too. That is what they wanted to do. The effect of the Bill will be to adversely impact on anyone who has any length of service at all, whether they are an administrative assistant or a permanent secretary. Let me put it this way: it is a slap in the face for every long-serving, loyal civil servant.

Karen Bell:  I worked as a journalist for 14 years and my career plan was always to go from journalism into PR. But I did not want to work for a PR agency that just promoted goods and tried to sell things to people. I wanted to work for an organisation that was doing something worth while, so most of the jobs I applied for were for a police press officer or in local government. This was the job I eventually got, which is communicating the work that the Government do, regardless of which party makes up the Government.
Until recently, I felt very proud of being a civil servant and the fact that what I do is worth while, makes a difference and impacts on people’s lives. We are committed to doing the best possible job we can for other people, although the fact that we have reasonable terms and conditions was a good element—I do not disagree with that. Until recently, I quite happily thought I would be in my present role until I retired. Even if I did not get promotion, I would be happy to stay doing the job I love and that I felt was worth while. There are so many people in our organisation and the wider civil service who feel the same, but now they just feel as though they are being cast aside and thrown away with little more than a backward glance.

Q 117

Angie Bray: I think everyone in the room values the work done by civil servants across the board. We know what excellent work they do and that goes without saying. We have been referring to the comparisons on occasion between the private sector and the public sector, and we heard that it was apples and pears and we should not be making that comparison. Can I get some comments on the public perception? Given the difficult times that the economy has been going through recently, the private sector has taken a huge hit and a large number of companies have been laying people off for months at a time or putting them on three-day weeks. There has been a lot of pain. Do you believe that the civil service understands that the pubic expect some shared pain—if you like—unfortunate though it is? We have to make the comparison, because the private sector has taken a big hit and many of its workers have had to be laid off for several months.

Charles Cochrane:  We are all extremely shocked and disappointed at some of the current examples, for example, the people made redundant because of Connaught going into administration. At one time, they were in the public sector and they now find themselves facing statutory redundancy payments. I feel for them, but I do not think that it makes it any better for them to argue that everyone else should be at that level. We should all be doing what we have been trying to do in the civil service, as Dave has said, and working our socks off, jointly with management, to avoid redundancy, recognising that change is happening, but trying to ensure that when people are made redundant in the civil service, or anywhere else, they are properly compensated for loss of office and enabled to rebuild their careers elsewhere.

Angie Bray: But within the economic circumstances we find ourselves in. That has to inform the whole—

Charles Cochrane:  And the unions have said on many occasions to management that if there are issues about dealing with redundancies in the civil service, let us sit down and work through how we find solutions. We have always been ready to have that type of discussion. One thing that we find upsetting is the comments made on occasion that large numbers of civil servants are sitting around doing their knitting or whatever, because they are too expensive to be got rid of. I have seen no evidence; if someone has it, I will happily sit down and go through it with them.

Angie Bray: Absolutely, I am sure that I would agree with that.

Joe Benton: May I just point out to the Committee that we have about 10 minutes of the session left and several Members have indicated that they wish to speak? I appeal to Members to keep their questions as brief as possible and I ask the witnesses to do likewise.

Q 118

John McDonnell: Members who are not here may engage in the debate on Report, so it is important that we get on the record today a clear message from you. I have a number of points. First, has the Bill helped or hindered the negotiations? Secondly, you are professional negotiators, and I welcome Karen’s input in particular, so what is the strength of feeling among your membership on the imposition of the Bill and the Government’s attitude so far?
Thirdly, on Second Reading, my right hon. Friend the Member for Dulwich and West Norwood raised the lack of information about the impact assessment of the Bill, particularly on equalities and other matters, with which I concur. What assessment have you undertaken of the impact of the Bill, particularly on equalities issues and how it will damage people’s lives? We have had individual submissions, to which we referred at length today, which relate to the “compact”, as it has been described. People have planned their careers and their lives around the compact—the balance between pay and the security of compensation arrangements on redundancy and the pension—but the Bill will tear up that compact. As we have seen in the individual statements, it will severely damage the lives of your members.

Dai Hudd:  If I can come in on some of your initial comments, in terms of whether the Bill has helped or hindered, it has hindered. I have no doubt that it is an unnecessary diversion. It is a threat and many of our members feel it very deeply. I think Karen is testimony to that, but she is only an example of many thousands of civil servants who feel similarly let down by the Government as an employer.
Prospect members, in particular, went through a very difficult period to come to an agreement with the previous Government, and they feel a sense of bewilderment because as far as they are concerned, we did respond to some of the economic pressures. I know there is a view that we may not have gone as far in dealing with those economic pressures as we might have, but there are complexities around the legal standing of civil servants in these particular terms that constrain all the negotiations. However, we responded by coming up with a package that would have saved £500 million, so I believe in that sense we acted in a way that was fair not only to our members but to society at large.
My colleague Neil Walsh has done some work on the impact assessment, and I think it would be helpful if he could give the Committee a flavour of some of the issues.

Neil Walsh:  Bearing in mind the time, I will try to be very brief. Obviously, the equality impact assessment with the Bill was, let us be fair, practically non-existent, and it covered over quite a few issues that are very important to our members.
One aspect is age discrimination. You could say that there is age discrimination in the terms of the Bill itself, and you could also say that it fails to deal with the age discriminatory aspects of the existing terms, which the February agreement did deal with. So, for example, if a civil servant is made redundant at age 35 with five years’ service, they will get compensation of five months’ pay. If they had the same service, job, grade and experience but were 40 instead, their compensation would be double that. That was something that the February agreement would have dealt with. It would have removed the discrimination. Obviously, the terms of the Bill do not deal with it and could, arguably, introduce further age discrimination.
There is also a particular impact on part-time workers. The existing terms as they stand allow for recognition of the impact on people who have recently gone part-time. For example, if a female civil servant has recently gone part-time in order to look after children, which is not uncommon, and is made redundant, the admittedly complicated formula of the current terms would allow for some of their full-time pay to be taken into account on the basis of recognising that they would eventually probably go back to full-time earning. They are not losing a part-time job; they are losing a part-time job that may revert to full-time hours once the child is of school age. This blunt Bill does not do anything about that.
The existing terms may give someone three times earnings, but that is reduced down to one. The effect would be far higher on part-time workers. Obviously, part-time workers are more proportionately women. There is a direct impact on part-time workers and an indirect impact on female civil servants, and the fact that that was not drawn out in the equality impact assessment is somewhat bewildering. Those are just two examples—I do not have time to go through others.

Dave Penman:  If I can pick up the point about strength of feeling among members, as you can probably imagine, it is quite an uncomfortable time to be a civil servant just now. Many of our members are facing a three-year pay freeze, because the senior civil service had a pay freeze imposed on it this year, as well as the further two-year pay freeze that has been announced. Everyone is just sitting and waiting for an attack on the pension scheme—the gold-plated pension scheme that the tabloids love to talk about. They are anticipating an announcement in a little more than a month about 25% to 40% potential cuts in jobs in many Departments, yet at the same time the redundancy arrangements that they have come to rely on and, in the case of our members, had reached agreement on in February, have been significantly cut as well.
That is having a very real impact on our members. We are getting a lot of messages now, and we talk to members about how they feel about these constant attacks, never mind what we can only describe as derogatory comments at times about the value of civil and public servants as well. Ultimately, our members are the same people the Government want to deliver their programme and policies, whether that is at a local benefit office, collecting tax or prosecuting crime.
The Government need to understand the cumulative effect of all of that in a very short period of time on committed public servants. For many of them, the Bill is only one tranche of those attacks, and because of the rather blunt—as we keep calling it—mechanism and instrument that has been used, I think that at times they almost feel that they are political footballs rather than valued public servants.

Q 119

Paul Uppal: I know that time is of the essence, so I will be very brief. We have heard the Bill referred to as “a blunt instrument” many, many times. There is consensus on all political sides that the issues raised by the Bill must be addressed. The reality is that the last Government tried to address the issue; we spoke earlier about the February agreement. Ultimately, however, the reality is that that process failed.
I am just interested in the counter-view and perhaps a different argument. I know that you cannot speak about current negotiations, obviously, but I am interested in your views about the fact that the Bill contains sunset clauses. Does that provide you with any succour?

Charles Cochrane:  It is a concept that we are struggling to get to grips with. As I understand it, the Bill contains sunset clauses and sunrise clauses. I am not quite sure which one follows which.
There have been suggestions that the Government’s intention is that if agreement is reached, the Bill will fade away. It has also been suggested—I think that it was suggested this morning—that there are scenarios whereby the Government might then reintroduce the Bill if, for example, some individuals decided to pursue a case to Europe. It has also been suggested—I think that it is contained in Government statements somewhere —that the Government intend to introduce other legislation to amend the Superannuation Act 1972, to take away the current protections in that Act about the need to seek the agreement of the unions to detrimental changes in relation to the compensation scheme. This is all very strange and complicated stuff, and not the normal way we go about conducting negotiations.

Dai Hudd:  In direct response to your question, “Do I find comfort in the way that the Bill is constructed?”, the answer to that is, “Absolutely not”. I really do not. I mentioned earlier that I think the Bill is irrelevant to the assessment that my union, as an independent union, will make about where we get to in negotiations. I say that because, as I explained earlier, there must be a balance between what Justice Sales has now said are our accrued rights, what the scheme will look like going forward and what the enduring parts of the scheme, including any transition arrangements, will be. We will have to take that balance into account.
If, for example, the balance we come to is that the issue of accrued rights has not been sufficiently recognised, not only will we have to reject it but we will also have to do so because otherwise we could potentially face legal challenges from our members. Our members will say that a judicial review has made a decision on accrued rights and accrued rights are not reflected in the agreement that I am putting to them. They will say, “Not only am I going to sue the Government, but I am going to sue my union, because you have not recognised that”.
That is my point about complexity. I know that it is more comfortable for some people to draw broad private-public sector issues, but this is a very complex scheme and the legal premise about the entitlements of civil servants has to be taken into account in the discussion. Without wishing to over-repeat the point, my union felt that the balance we struck with the last Labour Government did that. It put the balance in terms of accrued rights and a good scheme going forward, and it gave the Government significant savings. Frankly, no other scheme that does not reflect that balance stands a cat in hell’s chance of getting off the ground. Otherwise, what we will face from all six unions is a legal battle that I can tell you now will be fierce, strongly fought on every corner and that will last a significant number of years. And if it does not come back to haunt this Government, it will come back to haunt a future Government.

Joe Benton: This will have to be the last question and it will have to be a quick one.

Q 120

Jack Dromey: Reference was made by the hon. Member for Ealing Central and Acton to public perception. On pay, can I put it to you, very quickly, that in the year to March 2010 pay in the private sector went up, according to the Office for National Statistics, by 3.6% but in the public sector it went up by 2.8%? Incomes Data Services estimates that in the next year, from April 2010 onwards, the average private sector pay rise will be 4% while the average public sector pay rise will be 1%.
On the issue of pay freezes, you have referred to pay freezes in the civil service. One million local government workers are also having a pay freeze, as opposed to 10% in the private sector in the year from April 2009 to April 2010.
Is it not the case therefore that the perception may be that in terms of—

Joe Benton: Order. I am sorry but we have reached the end of our allotted time for questions. I thank all our witnesses. We will now hear evidence from Fiona Draper and from the Public and Commercial Services Union.

Joe Benton: Thank you for coming. Perhaps you would like to introduce yourselves to the Committee before we start the questioning.

Fiona Draper:  My name is Fiona Draper. I am an independent pensions consultant. I provide technical advice and mainly training services to trade unions, but also to clients in the public and private sectors.

Geoff Lewtas:  I am Geoff Lewtas. I am the PCS director of bargaining and equality. I am here today to answer your questions, obviously, and I am grateful to have had a little advance notice of at least some of them.

Ian Barton:  My name is Ian Barton. I am a PCS member at the Government office for the east of England. I am also the local PCS rep in that office.

Stephen Ennis:  I am Steve Ennis. I am a PCS member for the Government office for the east of England.

Joe Benton: Thank you very much. We will begin with a question from Gavin Williamson.

Q 121

Gavin Williamson: Do you believe that the threat of legal and strike action will substantially change the Government’s bargaining position?

Ian Barton:  Is that question in relation to this Bill? I presume that it is and not a wider question. If it is related to the Bill we have not at this point in time suggested that we would threaten or contemplate industrial action. My union took industrial action earlier this year in protest about the February agreement, which has been mentioned, because of the reasons that we had for rejecting it. We felt that it was an unsatisfactory agreement.

Q 122

Gavin Williamson: With the benefit of hindsight do you think that it would have been better to accept the agreement that was put forward?

Ian Barton:  No, we don’t. We were very much encouraged in our view that the agreement did not to a sufficient extent satisfy the need to protect accrued rights to redundancy compensation. We are pleased that the judicial review outcome supported our concern that accrued rights should not be changed except by agreement. We are very much concerned to ensure that the current negotiations are successful and that they lead to an agreement. We think that is by far and away the best way to proceed with what are, as has been demonstrated already at this hearing today, very difficult and tricky questions of trying to get the terms amended and reformed in a satisfactory way.

Q 123

Gavin Williamson: Do you accept the need to reform the terms? Do you accept that the current situation that the Government have inherited means that there will have to be restructuring within the civil service, and that the current civil service compensation scheme is not viable as it stands, to be able to deliver the savings that are going to have to be made?

Geoff Lewtas:  There are a series of points in that single question. Certainly I am sure that we are very much in a position, looking immediately ahead to 20 October and the announcement of the outcome of the public expenditure survey, to voice great concern about the huge extent of cuts we believe may be made in the services that Government Departments of various types provide, and the huge job losses or office closures that are likely to flow from all that.
In looking at the impact of the Superannuation Bill one has to say, blunt instrument as it is, that it is going to be making life even more difficult, in dealing with large job losses, than we have ever experienced before. My colleague who was answering questions in the previous session, Charles Cochrane, said a lot, which I do not think I need to repeat, about the sophisticated procedures —the protocols that we have agreed—for trying to avoid compulsory redundancies. Clearly, that is going to be extremely difficult, and if there is not a satisfactory set of voluntary redundancy terms available we are going to find that compulsory terms on extremely poor levels of compensation become the norm, if this Bill is enacted. That would be an extremely difficult step for us to accept.

Q 124

Harriett Baldwin: If the February 2010 deal were now offered again to your members do you think that they would vote to accept it at this point, or do you think they would vote to do what they did previously?

Geoff Lewtas:  I do not think it is possible for me to accurately suggest what our members would do in a given scenario, such as you are asking about. May I try to answer the question in a different way? It goes back to an answer given in the previous session. If the negotiations, which have been running now for a number of weeks, had had as their start point the February detail and content, I think that that would have been a reasonable starting point, from our point of view.

Q 125

Harriett Baldwin: In terms of the agreement that came up in the debate on Second Reading, that everyone would prefer to see a negotiated outcome here, would you also subscribe to that view?

Geoff Lewtas:  Yes, I very much would like to see a negotiated outcome, but we do have great fears, which again were reflected in the responses that you had in the previous session, about the Bill and how, frankly, it gets in the way of a reasonable negotiating situation. I think that is the case, very much, because it badly serves the negotiating process. It provides something of a gun at our heads in trying to get reasonable negotiations running.

Q 126

Harriett Baldwin: What impact is it having on the timing of negotiations? If the Bill were to receive Royal Assent by the end of October, my understanding in respect of current employees who have stated redundancy terms as of now, is that those which apply currently would still apply up until the Bill receives Royal Assent. Does that have an impact in terms of the timing of your willingness to come to a negotiated agreement here?

Geoff Lewtas:  The simple answer is that we are keen for the negotiations to proceed as quickly as possible. We make ourselves available to the extent that is needed to get a negotiated outcome that we could then present to our members as a potential agreement. What we find is that, to an extent, the existence of the Bill puts us in something of a straitjacket situation in trying to complete negotiations rapidly. As I see it, if I have this construction right, the sunset clause will be operative or the Bill itself may lapse if an agreement emerges. Whether it is going to be possible to get to the point of reaching agreement in the sort of time scale that we appear to be into with the parliamentary process, I do not know. I think that will be very difficult.

Q 127

Harriett Baldwin: And the major sticking-point, from PCS’s point of view?

Geoff Lewtas:  It is important that I try to elaborate on the PCS view of the February deal, because that might be helpful to the Committee in understanding where we are coming from. I ought to start by making it clear that the PCS is by far and away the largest trade union in the civil service. We have close to 300,000 members who are civil servants—there are about 280,000—and other members who are in the private sector. That is probably two and a half times more civil service members than the other five unions added together. It is certainly double the size of membership in all the other five unions that reached the February deal.
When we looked at the terms of that deal, earlier this year, we found that it did give a degree of protection to some of the lower-paid—those who were on a £20,000 salary or less. From the civil service statistics, we know that that represented something like 40% of civil servants in total—the £20,000 threshold and that degree of protection. But that left some of what we would regard as still being lower-paid people—certainly people on less than the average salary of civil servants; I am not saying that is my definition of low pay—plus a lot of other people who were on salaries in the £25,000 bracket. When we looked at those statistics, what that told us was that the deal on offer had probably given some reasonable protection for the lower-paid, in the £20,000 and below bracket, but that there was another 50% of our membership for whom the deal on offer did not represent an adequate or satisfactory degree of protection of accrued rights, in our judgment.
That was why we decided that we should reject the deal and recommend to our members that that was the situation. It was also because we felt that the accrued rights should not be interfered with. They can be changed at a given date, but those accrued rights that are already in place should not be interfered with, except by means of reaching an agreement to that effect. It was on that basis, therefore, that we felt we had no real choice but to pursue the judicial review, with the outcome that you are all aware of.

Q 128

Tessa Jowell: I want to follow up this point, because as you will have gathered, the questioning from the Opposition side and, I think, from some hon. Members on the Government side has been very much to establish what the ball park for a negotiated settlement is, so we keep coming back to the February 2010 agreement. I think that it would be difficult if the view conveyed to the Committee is that that remains inadequate. However, as you said, Mr Lewtas, the PCS took the previous Government to judicial review and won, so that deal was essentially struck down and could only be resurrected if the issues of contention, particularly in relation to accrued rights, were resolved by negotiation. The Minister said during the debate that, had an agreement been reached, there would have been a pressing case to honour it. As a national officer, you speak for the union, so if that deal were put back on the table with a view to reaching a negotiated settlement without the disruption of industrial action or, indeed, the damage that imposing the Bill’s powers would do, are you optimistic that the PCS would find an accommodation that would not lead to a further judicial review or leave the Bill’s provisions as the only available option on the table?

Geoff Lewtas:  My difficulty with your question is that it is trying to get to the root of the negotiating process. You are probably suggesting that I do not reveal our hand in negotiations. I do not intend to reveal our hand, but what I am saying is that I think it would help the negotiating process if we had the terms of the February deal as a start point. We would like to move on from there and would very much like to reach an agreement. In doing so, we will reflect further on the judgment that we arrived at earlier this year on the extent to which what was eventually on offer satisfied sufficiently our concern to protect accrued rights to an extent where we felt not only that the bulk of the lower-paid were adequately protected—it was really only some of the lower-paid whom we felt were adequately protected—but that some of the very longest-serving, loyal civil servants whom we also represent were protected, which is a very important point in relation to the Bill. I think that is the damage that the Bill does. There are people who have given fairly lengthy service and who have been in the civil service for 20 years or more—that is the case in the context of very many of our members—and considerable damage will be done to the levels of compensation that they can expect if the Bill is enacted.

Q 129

Tessa Jowell: That is very helpful indeed. I want to follow on from that. Are you aware of any of your members sitting around with nothing to do because they are too expensive to make redundant?

Geoff Lewtas:  No, we are not. This is something that the Minister has commented on, but we really do not believe that there is any substance to it.

Tessa Jowell: I think that is helpful.

Geoff Lewtas:  You may find one or two people in some organisations, but it really would be a very small phenomenon.

Tessa Jowell: On the basis of what we heard from Mr Amroliwala this morning, we can take that as being not true. In fact, other duties are being found for staff in, for instance, the Central Office of Information, whose functions may be being wound down. It is important to get that clearly on the record.

Q 130

Richard Graham: Thank you all for coming. My first question is to Fiona Draper. In the advice that you give your clients, how do you separate, or do you treat as exactly the same, the question of the rights—in particular, the accrued rights that are due to individuals who serve an organisation that has a pension scheme and the “rights” attached to provisions for superannuation?

Fiona Draper:  I would have to say truthfully that that question has never come up. I am not a financial adviser and I am not a lawyer. I am not in a position to give legal advice on the rights issues that you refer to. I am sorry, that is not a helpful answer, but it is truthful.

Q 131

Richard Graham: Let me try again in a slightly different way. Do you regard the “accrued rights” of provisions for redundancy as accrued rights in the same way that a pension scheme accrues a pot of money that builds up during service with that organisation?

Fiona Draper:  Outside the public sector, the question would be unlikely to arise because redundancy terms are not generally linked to pension arrangements in the same way as they have been in the public sector, particularly the civil service.

Q 132

Richard Graham: Can I turn to Geoff Lewtas, who represents PCS? During the verbal evidence given on 27 July, as you may have heard earlier, I put to some of the gentlemen representing other unions the quotation from your colleague, Hugh Lanning, who said:
“the sticking point for us in the last negotiations was over the level of protection there was to the lower paid in the Civil Service.”
I gather he also said that half of the 300,000 civil servants who are your members earn under £22,000 a year. Under the negotiations held by the last Government, anyone who earned under £20,000 would have retained three years’ pay. What makes you think that you will be able to achieve a better settlement than that for the lower-paid, given that all the other unions believed that that was a fair deal?

Geoff Lewtas:  Well, without giving too much away, our negotiating position earlier this year was very much that, given the protection that was essentially afforded to people on £20,000 or less, they should still ultimately, if they had done sufficiently long service, achieve a £60,000 compensation payment. The statistics produced by ONS on civil service staff numbers demonstrated to us that something like 40%, perhaps a few more, of our members had that degree of protection. That left a substantial number, at least another 50% of our own membership, in a less advantageous position. To cite a phrase used by one of my other union colleagues in an earlier session, we did not believe that the balance in the deal on offer was acceptable. It needed to shift in the right direction more than it had done.

Q 133

Richard Graham: Of your 300,000 members, how many responded to the ballot? Of those who responded, how many were in the lower-paid category?

Geoff Lewtas:  We do not have a breakdown of votes related to pay. I am sorry that I have not come here with detailed information about the ballot that I could give to you. I can supply that information and will happily do so after today, if that is satisfactory.

Q 134

Richard Graham: I think that would be very helpful. The suggestion has been put to me that the turnout in the ballot was no more than 20%. If a narrow majority of that took the union’s position that it should reject the offer on the table, the question in my mind is whether that really represents the interests of more than half your members—150,000 people—who form the category of the lower-paid. If very few of them actually responded to the ballot, or voted in favour of it, I wonder whether the question is the extent to which the union’s leadership was letting down the lower-paid members.

Geoff Lewtas:  I hesitate to say any more. I do not recall the ballot being based on such a low percentage as you suggest. But, rather than say that you are wrong, it is better that I get the figures and supply you with them, so that you are able to take them into account. What I would say about industrial action ballots, or other ballots, is that when we have a ballot, we have to make judgments before action is called about whether there is sufficient strength there. If a union gets a yes vote but it is not a particularly strong vote, the union would not automatically decide to authorise the industrial action. So we will have consciously taken a decision, based on the ballot outcome, about whether it was a sufficiently strong indication of our members’ view. We would have proceeded on that basis and then have taken the industrial action that we did.

Q 135

Richard Graham: In the advice that you gave to your members, did you provide them with the fact that your own negotiators had accepted the original deal and that all the other trade unions had as well?

Geoff Lewtas:  That would have been untrue. We did not accept the original deal.

Q 136

Richard Graham: You are denying that your own negotiators came away from the meeting with a positive recommendation.

Geoff Lewtas:  Yes, I have seen references to this in some of the parliamentary debates, and I think that there might be a reference to some discussions that were taking place a year earlier, in 2009. That might be what is at stake here in the statement, which has nevertheless erroneously been made, about how the events occurred.

Q 137

Richard Graham: If I was still a civil servant—still on that salary—and I was a member of your union, if the eventual deal is agreed, or if a deal is not agreed and the provisions of this Bill go through, I would feel extremely let down by my union. What would you say to any of my constituents who felt that way?

Geoff Lewtas:  I would say that they had been extremely let down by you yourselves in Parliament, because this is an unprecedented and a completely unacceptable interference in what is always going to be a very delicate bargaining process between the Government and the unions involved.

Q 138

John McDonnell: I would just like to clarify the issue of the ballot, because it comes up time and again. It would be useful to have the exact figures. But when it comes to industrial action, you are required in law to ballot all members and accordingly to inform the employers where the members are located and their grades and job descriptions.

Geoff Lewtas:  Absolutely.

John McDonnell: So everyone has the opportunity to engage in the ballot. The policy on this matter is therefore determined by your members and not by union officials. Is that true?

Geoff Lewtas:  That is absolutely true.

Q 139

John McDonnell: May I just go back to the points that we raised this morning? It is important that we get the PCS’s view on the record for other Members. You have heard the comments from other trade unions represented here today. Has the Bill helped or hindered negotiations? That is the first question that we asked the others, and it would be helpful to have your view.
Secondly, you heard this morning the discussions on the legal opinions. In the last round of negotiations, the Government lawyers were adamant that the PCS had no case in law. You went to court, and you won, and the judge determined that these were accrued rights. May I ask you the same question that we asked the civil servant this morning? Given that track record, how robust is your legal opinion this time around, in relation to resorting to Europe in terms of human rights, and how strongly are you advised that you would win? Your deputy general secretary said before the Public Administration Committee that the union would, if necessary, resort to law. So that strength of opinion is important.
Finally, on the issue of impact, your union represents the lowest-paid. We have had individual submissions, and we have had other unions’ assessment of the impact. What is the impact on your members of the Bill itself? We do not know what you have been negotiating, so what is before us? What is the impact on your members, particularly in terms of the equalities impact?

Geoff Lewtas:  I would like to use my colleagues Ian Barton and Steve Ennis to give their own illustration of the impact on themselves, but perhaps I can pick up on some of your other questions before they do that.
Does the Bill help or hinder? I think that I have said enough about its unacceptable interference in the bargaining process to indicate that I think that it really does hinder the negotiating process considerably. It is likely to mean that the individuals—the officials—that we are negotiating with take a more difficult approach to the negotiating process and make it more difficult to free up the issues and the details that need to be talked through, and make it more difficult to get the negotiating position of their side moved on in the right direction towards the possibility of reaching an agreement, I would suggest. I regret that. I think that if the Bill were taken away from the current scenery that surrounds us, it would be a helpful move, quite frankly.
On the question of the law, you had a very important contribution from my colleague Dai Hudd in the earlier session. He made it clear that the situation that we are now in legally, arising from the judicial review, means that as well as unions having the potential to pursue legal action, individuals might also contemplate doing that. They have got a fairly clear, well-written legal judgment from Mr Justice Sales, which sets out how the accrued rights are regarded in law and that currently, certainly before this Bill is enacted, you cannot make detrimental changes to accrued rights without an agreement being reached. That is the situation in law as it stands at the moment.
If we arrive—I genuinely very much hope that we will not—at a situation where there is not a negotiated agreement but an imposition of terms arising from this Bill, then we will certainly be looking to the law to answer our concern about the impact that that will have. We have taken advice, as has been said by my colleague Charles Cochrane, from leading counsel. That advice is that there is a strong case for us to pursue in the event that we do not deal with this in a more satisfactory way; in the event that there is imposition of seriously worse terms for individual civil servants.
Could I ask Ian and Steve—Ian first—to talk about the impact that the Bill will have on them and perhaps some of their colleagues who are in similar situations?

Ian Barton:  Thanks, Geoff. I have been in the civil service for 27 years, and because of that long service, I would attract the highest terms around the compensation scheme three years’ salary. For most of my civil service career, I have been on relatively low pay and worked my way through the grades. I suddenly find myself, as a grade 7, as a relatively high earner. The impact of the Superannuation Bill on me would be to reduce from three years to one year the amount of compensation that I would get, which is a very real situation for me because I work in the Government office network. As I am sure you are aware, Eric Pickles has indicated, in principle, the decision to abolish the Government office network, so this is hugely relevant for me at the moment. Three years salary for me, currently under the existing terms, would amount to £138,000. Sure, some people will have a view on a civil servant attracting that sort of sum, but the new terms will mean that that will go down by £92,000 to £46,000 before taxation. Irrespective of the sums involved, I am sure that you would agree that £92,000 is a huge amount to think about suddenly, in terms of planning for your future.
I see the compensation scheme as a safety net. I never really thought of the money in the compensation scheme as money in my pocket; I thought it was more there to help secure my tenure in employment, because that is really what I want to do. After 27 years as a public servant, I would really like to stay in public service. It is what I enjoy doing. I have had options in the past to leave the civil service and move into the banking or insurance fields, but I took a calculated decision at that time. Although I did not earn as much money as some of my friends at that particular point in my career, on balance, the overall employment package—taking into account pensions and the security of my job—is why I wanted to stay in the civil service. I thought that that was important. I considered the compensation scheme a critical part of that overall employment package.
I find myself now having to think about future plans with potential redundancy. We all know about the reduction in public sector job opportunities. With the hit that the public sector is going to take, it is going to be difficult to be redeployed. If the safety net of the compensation scheme is reduced in that way, the decisions that we all face in life—putting children through university, looking after elderly parents and all those things that I am sure are pertinent to you as well—will become very real issues for me now.
One of the other things about seeking redeployment, as well, or looking for employment outside in the private sector, is that the skills that you tend to pick up as a long-term civil servant are very generalist skills. From some of the research that I have been doing, other employment opportunities tend to call for very specific skills, whereas you learn a generalist skill set in the civil service, so I am not sure where that positions me for opportunities within the private sector. It is a difficult time.
I suppose that there is a question as well about what sort of terms I would have been able to attract had I been a private sector employee for 27 years, earning around £45,000. I do not know whether I would go on a statutory minimum; I do not know whether I would have the opportunity, perhaps, to negotiate a better package for myself than the statutory minimum. It is an interesting point.
I am also a representative at GO East, so I get a flavour of the opinion among the members there. We have about 90 members. Just as an aside, it is worth noting that of those 90 members, I have only identified two who attract the headline figure of six years’ compensation terms. Only two of 90 members whom we have identified attract that, which perhaps gives some sense of the scale of numbers involved there.
Certainly, the majority of members see the changes in the Superannuation Bill as hugely detrimental to the life decisions that they will take. People have taken decisions, for example, not to take out mortgage protection insurance, because they believed that they had secure jobs, but they now find themselves in a situation where their jobs are under threat. At the same time, they have taken the double whammy that their compensation payments will be considerably reduced by the Bill.

Stephen Ennis:  I will be brief. I have been a civil servant for 18 years. I took a decision three or four years ago to purchase a rent-to-buy house. The simple equation is that if the redundancy package is changed, I will lose the house. That is the short and quick of it. My circumstances might be a little unique; I am not sure. My partner is registered disabled. I need the kind of employment that the civil service offers someone like me, and those terms and conditions. It is very unlikely that I would be able to secure a similar job. The Government office is disappearing, and there will not be anything else, particularly where I live, to employ me. I will lose the house and a job, basically. I cannot be any more open and honest than that.

Q 140

Jack Dromey: Can I ask one question comparing public and private, and then some questions in relation to the negotiating process? Do you have members who perform call centre functions?

Geoff Lewtas:  Yes, we certainly do.

Q 141

Jack Dromey: Are you aware of the difference between comparable employees in call centres in the public and private sectors?

Geoff Lewtas:  We have information that produces a comparison between call centre staff in the civil service and those in the private sector. It is based on a report by Hay consultants and was commissioned by the Cabinet Office, not by the unions. It shows that civil service pay is about 14% lower than that in private sector call centres. That is part of a wider picture and was touched on in the last session.
I would like to add briefly that we also have a report produced by Incomes Data Services, and if it considered to be pertinent to the Committee, we can certainly supply a copy. It was a specific piece of pay comparison work last year. It compared job weight of roles in the civil service with other parts of the public sector and the private sector, specifically the banking and finance areas of the private sector. All three counts of comparison demonstrate that the civil service is well behind, with much lower salary levels. They are, on average, between £3,000 and £5,000 a year less than their counterparts not only in the private sector but in other parts of the public sector.

Q 142

Jack Dromey: It would be helpful if you made those reports available, because we need to address the issue of perceptions, which one of my colleagues referred to earlier.
I want to ask you about the negotiating process. Are the negotiations under way?

Geoff Lewtas:  The negotiations in relation to compensation are certainly under way, and there have been a number of meetings.

Q 143

Jack Dromey: Do they involve all the unions?

Geoff Lewtas:  Yes, they involve all the unions.

Q 144

Jack Dromey: Do you want a negotiated settlement?

Geoff Lewtas:  We very much want a negotiated settlement. I think that I have already made that clear.

Jack Dromey: As soon as possible?

Geoff Lewtas:  Yes. There is certainly no question of us seeking to slow down the negotiating process or to delay for any particular reason. We are trying to make sure that we get to what we believe is an acceptable deal that could present to our members. We are clearly not there yet.

Q 145

Jack Dromey: Can I ask you a crucial question? We are not here to negotiate a settlement, but we need to know on behalf of Parliament whether a negotiated settlement is possible. Reference was made earlier by Members on both sides about the offer that was put forward in February 2010. What would happen if that were put back on the table? Do I conclude from what you said earlier that if that were put back on the table, in terms of quantum and shape, that might form the basis for a settlement if some of the issues about the shape of the package were addressed?

Geoff Lewtas:  As I said before, it would certainly be a helpful starting point. It would move the negotiations on to a very much more realistic basis for getting closer to an end point and closer to the realistic possibility of reaching an agreement.

Q 146

Nick Hurd: May I push you a little further, Mr Lewtas, on what has been a common theme of Committee members’ questioning? Let me put it more explicitly today. Would you, as an executive, recommend to your members acceptance of the February package?

Geoff Lewtas:  It is a question that I am not in a position to answer. I do not have the authority to give you a straightforward answer because, frankly, I would otherwise be revealing my negotiating hand. We would need to look at the conclusion of the negotiations. We would certainly be looking for something that moved us on further than the February deal in terms of some of its details at least.

Q 147

Nick Hurd: Thank you for that. Members are keen to get a sense of how seriously the negotiations are taking place. None of us is party to them on a day-to-day basis, but it is the backdrop to the Bill. Of particular interest is the degree to which your union is engaged with the process. As I understand it, the meetings are regular, quite intense—almost daily, I think that the Minister for the Cabinet Office said. Can you confirm whether the PCS has attended all the meetings, or give us a sense of what proportion of meetings you have attended and, therefore, the degree to which you are actively engaged in trying to negotiate a settlement?

Geoff Lewtas:  My remit does not involve me in attending those specific meetings—I am engaged in other matters, as they say—but I am absolutely certain that all the meetings that have been held have had a PCS representative there. That would usually include my colleague Hugh Lanning, the deputy general secretary of the union. We are taking the negotiations very seriously. Unfortunately, he cannot be here today to answer your questions directly, because of the TU Congress going on in Manchester as we speak.

Q 148

Nick Hurd: Thank you. My third and final question is: who do you think won from your decision to pursue a judicial review?

Geoff Lewtas:  We think it was extremely important that the law, as we understood it, was upheld. In that sense, the case that we presented did come out on our side. We think that it has been extremely helpful, frankly, for the future of the situation that we are dealing with that the judicial review did find in our favour. There is a point that has to be taken very seriously by Parliament and by this Committee in particular about the meaning of that legal judgment. The more recent legal opinion that we have had since the Bill was published makes us feel that there is some strength to the view that, if the Bill is enacted, legal challenges could proceed with every possibility that they will succeed.

Joe Benton: Order. If there are there no further questions, on behalf of the Committee, I should like to thank the witnesses for their attendance. Thank you very much for your answers to our questions. That concludes our evidence session.

Ordered, That further consideration be now adjourned. —(Stephen Crabb.)

Adjourned till Thursday 16 September at Nine o’clock.